Should You Lease or Buy

The most often made point about the decision whether to lease versus buy a credit processing terminal is that the lifetime cost of the lease will likely be two to four times the upfront cost of purchasing the same equipment.

In a typical example, you could be faced with the option of paying $500 now to purchase credit card processing equipment, or leasing the same equipment for $30/month for 3 to 4 years. The lease payments over 4 years would total $1,440 - nearly triple the amount you could pay right now to own the swipe machine outright.

The amount is high because the leasing company has to factor into its calculations the possibility that you may default on payments sometime during the lease term, so its risk is considerably higher.

While a purchase would seem the clear choice, there a number of factors that should be considered before finalizing your decision on which way to go in acquiring your credit card processing machine:

Cashflow Considerations: Obviously, if you have the money available to buy the credit card processing equipment outright at the beginning without causing financial strain, you should seriously consider doing so. But if your cashflow is tight, keep in mind that even though the monthly cost of leasing is relatively expensive, not having to cough up a large sum immediately may make financial sense provided the cash you are saving by not having to pay the purchase price upfront can be used in your business to provide a return on that amount that will likely exceed your leasing costs.